They make tons of cash!
As investors we love it that our banks are so profitable. Quarter after quarter they churn out mind boggling numbers. Oh sure now and then they disappoint a tad by missing expectations and we sell off the shares for a while. For the past few years they held off increasing dividends while reorganizing after the world wide banking crisis which affected them very little. With that behind us the smart money is betting that we'll see dividend increases in 2011. In fact, National Bank (NA) kicked it off with a dividend increase announced last November, the first Canadian bank to do so since 2007. RBC (RY) joined the party last week with an announcement of a 8% dividend hike.
As retail bank customers it's more of a love/hate relationship. While we appreciate the banks' for the services they provide we often get more than a bit PO'ed with their #$%*! charges. If you're like me, you've shopped around for a package with the lowest possible monthly service charges, transaction fees, ATM fees etc. I'm happy to report that I pay no service charges for my day-to-day banking services. I think they call it a "seniors' package"...don't like the term but what the heck, I'll take...whatever. For the record, I NEVER order from the seniors' menu at restaurants.
So, you ask, what's my beef with bank charges? I didn't have one until a couple of weeks ago. We took a short four night trip to Vegas in mid April. In keeping with our practice, we took cash out of our US funds account. No exchange, no problem. Right? I did have fair warning before we left that my better half intended to shop. The shopping in Vegas is just too much fun. Jimmy Choo anyone? It was no surprise that we burned through the cash and were soon into the plastic and therein lies my beef with bank charges.
For the entire period we were away the Canadian dollar was trading well above the US, in a range between 1.0225 and 1.0275 US. Guess how we made out with our credit card charges. The best we did was 1.00368 on a day when the C$ was over $1.025 US. A day or two later when the C$ dropped below $1.025 US the rate was .99558. Yup, while our Canadian dollar was worth well over the US$ we lost out on any possible savings by virtue of a 2.5% fee for all foreign currency transactions.
Yup, our banks make tons of money...trouble is, all too often these great returns are at our expense. For my part, I'll keep shopping for the best deal and I'll stick with my BMO, RBC & TD shares. After all, like I've mentioned before, the Canadian banks have outperformed the markets every years since 1967.
As investors we love it that our banks are so profitable. Quarter after quarter they churn out mind boggling numbers. Oh sure now and then they disappoint a tad by missing expectations and we sell off the shares for a while. For the past few years they held off increasing dividends while reorganizing after the world wide banking crisis which affected them very little. With that behind us the smart money is betting that we'll see dividend increases in 2011. In fact, National Bank (NA) kicked it off with a dividend increase announced last November, the first Canadian bank to do so since 2007. RBC (RY) joined the party last week with an announcement of a 8% dividend hike.
As retail bank customers it's more of a love/hate relationship. While we appreciate the banks' for the services they provide we often get more than a bit PO'ed with their #$%*! charges. If you're like me, you've shopped around for a package with the lowest possible monthly service charges, transaction fees, ATM fees etc. I'm happy to report that I pay no service charges for my day-to-day banking services. I think they call it a "seniors' package"...don't like the term but what the heck, I'll take...whatever. For the record, I NEVER order from the seniors' menu at restaurants.
So, you ask, what's my beef with bank charges? I didn't have one until a couple of weeks ago. We took a short four night trip to Vegas in mid April. In keeping with our practice, we took cash out of our US funds account. No exchange, no problem. Right? I did have fair warning before we left that my better half intended to shop. The shopping in Vegas is just too much fun. Jimmy Choo anyone? It was no surprise that we burned through the cash and were soon into the plastic and therein lies my beef with bank charges.
For the entire period we were away the Canadian dollar was trading well above the US, in a range between 1.0225 and 1.0275 US. Guess how we made out with our credit card charges. The best we did was 1.00368 on a day when the C$ was over $1.025 US. A day or two later when the C$ dropped below $1.025 US the rate was .99558. Yup, while our Canadian dollar was worth well over the US$ we lost out on any possible savings by virtue of a 2.5% fee for all foreign currency transactions.
Yup, our banks make tons of money...trouble is, all too often these great returns are at our expense. For my part, I'll keep shopping for the best deal and I'll stick with my BMO, RBC & TD shares. After all, like I've mentioned before, the Canadian banks have outperformed the markets every years since 1967.
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